Mining Lease Hc Claims

THIS MINING
LEASE (Agreement) is made this 17th day of July, 2006 by and between KM EXPLORATION LTD., a Nevada
limited liability company (Owner); and GOLD RUN INC., a Delaware corporation
(Lessee).

These
claims, together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and
remove the same, and all water rights and improvements, easements, licenses, rights-of-way and other interests
appurtenant thereto, shall be referred to collectively as the Property.

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A.
The parties now desire to enter into an agreement giving Lessee the exclusive right to explore, develop, and
mine the Property.

1.1 Term
of Lease. Owner hereby leases the Property to Lessee for an initial term of ten (10) years. The Lease
may be extended in five (5) year increments thereafter for a total term of thirty (30) years, and for as long
as mining operations are conducted therefrom, provided that Lessee (a) gives advance written notice of its
intention to renew the Lease for each period of five years and (b) Lessee continues to satisfy the obligations
of this Lease, including the payment obligations set forth in Sections 1.2 and 1.3 below. The Effective Date
of this Agreement will be the date upon which the lease payment required in paragraph 1.2(a) below is made,
and all rights and obligations shall be calculated on the basis of that date.

1.2 Lease
Payments. Until production is achieved from the Property, Lessee shall make the following Lease
Payments to Owner:

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1.2.1 Lessee
shall make an initial lease payment to Owner of TEN THOUSAND DOLLARS ($10,000.00) within fifteen (15) business
days after the date this Agreement is signed and delivered to Owner.

1.2.2 Commencing
on the first anniversary of the Effective Date Agreement, Lessee shall make the following Lease Payments to
Owner:

Anniversary of Effective Date of Agreement

Annual Lease Payment

Years 1 through 4

$10,000.00

Years 5 through 9

$20,000.00

Years 10 and all years thereafter

$32,500.00

1.2.3 Lessee
shall have the right, in its sole discretion, to discharge the payment obligations set forth herein by issuing
Owner a minimum of fifty (50%) percent cash, and the balance in free trading shares of Lessee, valued on the
date of issuance.

1.3 Production
Royalties. After production is achieved from the Property, Lessee shall pay Owner the greater
of (i) a royalty on production equal to two and one half (2.5%) percent of net smelter returns, and (ii)
the lease payments payable pursuant to Section 1.2 in order for this Lease to continue and be extended
pursuant to Section 1.1.

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The term net smelter
returns shall mean the gross value of ores or concentrates shipped to a smelter or other processor (as
reported on the smelter settlement sheet) less the following expenses actually incurred and borne by
Lessee:

1.3.1 Sales,
use, gross receipts, severance, and other taxes, if any, payable with respect to severance, production,
removal, sale or disposition of the minerals from the Property, but excluding any taxes on net income;

1.3.2 Charges
and costs, if any, for transportation from the mine or mill to places where the minerals are smelted, refined
and/or sold; and

In
the event smelting or refining are carried out in facilities owned or controlled, in whole or in part, by
Lessee, charges, costs and penalties for such operations shall mean the amount Lessee would have incurred if
such operations were carried out at facilities not owned or controlled by Lessee then offering comparable
services for comparable products on prevailing terms.

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1.3.4 Payment
of production royalties shall be made not later than thirty (30) days after receipt of payment from the
smelter. All payments shall be accompanied by a statement explaining the manner in which the payment was
calculated.

1.4 Specimen
Gold. Subject to the consent of an Operator, at reasonable times and upon Owner giving one (1) day
notice to Lessee and the Operator, Owner shall have the exclusive right to collect and sell all specimen-grade
minerals produced from the Property. Owner will use all reasonable efforts to ensure that such collection does
not interfere or impede with operations or personnel. Owner can purchase gold specimens at a cost of ten
percent (10%) below the London P.M. Fix for gold, and for all other minerals at a cost equal to the prevailing
fair market price for such other mineral specimens on the date that the specimen is offered to Owner; the
weight of the specimen will be determined by weighing the entire sample, including the matrix. Owner shall
only be allowed to collect up to $50,000 per year of specimen minerals from the property per year. Lessee
shall receive a credit against its obligation to pay production royalties which credit is equal to the value
of the minerals collected, to a maximum credit of $50,000 a year.

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1.5 Option
to Purchase Gold Royalty Interest. From time-to-time, at any time during the term of this Agreement,
Lessee shall have the option to purchase one and one half (1.5) points of Owners two and
one-half (2.5%) gold production royalty, each point is equivalent to one (1%) percent of net
smelter returns. The purchase price for each royalty point shall be as follows:

Average Price of Gold for Preceding 30 Days

Price Per Royalty Point

$300.00 per ounce and lower

$2,000,000.00

$300.01 to 400.00 per ounce

$2,500,000.00

$400.01 to 500.00 per ounce

$3,000,000.00

$500.01 to 600.00 per ounce

$4,000,000.00

$600.01 to 700.00 per ounce

$5,000,000.00

$700.01 to 800.00 per ounce

$6,000,000.00

$800.01 to 900.00 per ounce

$7,000.,000.00

Lessee
shall have the right to purchase less than a full royalty point, at a pro-rata price. This same
formula shall be followed to calculate the Price per Royalty Point for additional increase
in the gold price.

This
same formula shall be followed to calculate the Price per Royalty Point
for additional increase in the gold price.

Under
no circumstance can Owners royalty be reduced below one percent (1%) of net smelter returns. Lessee will
deliver notice of its intention to purchase one or more points to Owner, and the parties will exchange the
purchase price and deed for the royalty

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point(s) within fifteen (15) days following
Lessee's notice to Owner.

1.6 Lessee
shall have the right, in its sole discretion, to exercise this Option and make the payments in Section 1.5 by
issuing Owner a minimum of fifty (50%) percent cash, and the balance in free trading shares of Lessee, valued
on the date of issuance.

1.7 Area
of Interest. Any claims staked by either Owner or Lessee, which lie within, either in whole or in
part, one (1) mile form the perimeter of such claim(s), will be deemed to be covered by and subject to the
terms and conditions of this Agreement.

1.8 Delivery
of Data. Upon execution of this Agreement, Owner shall deliver to Lessee copies of all maps, deeds,
and other documents in its possession which pertain to the claim title and boundaries, prior workings,
exploration and production history, and so forth.

SECTION TWOMining Operations

2.1 Right
to Explore, Develop and Mine. Upon execution of this Agreement, Lessee shall have the right to make
geological investigations and surveys, to drill on the Property by any means, and to have all the rights and
privileges incident to ownership of the Property, including without limitation the right to mine underground
or on the

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surface, extract by leaching in
place or any other means, remove, save, mill, concentrate, treat, and sell or otherwise dispose of ores,
concentrates, mineral-bearing earth and rock and other products therefrom. In the event that Lessee
establishes a millsite on the property, Owner will transfer to Lessee all of its right, title and interest to
the mineral claims upon which the millsite is situated for One ($1.00) Dollar, except that Lessee shall remain
obligated to pay Owner production royalties as set forth herein on any and all minerals produced from such
mineral claims.

2.2 Conduct
of Work. Lessee shall perform its mining activities on the Property in accordance with good mining
practice, shall comply with the applicable laws and regulations relating to the performance of mining
operations on the Property, and shall comply with the applicable workers compensation laws of the State
of Nevada.

2.3 Liability.
During the term of the Agreement, Lessee shall indemnify and hold Owner harmless from my claims,
demands, liabilities or liens arising out of Lessees activities on the Property.

2.4 Liens.
Lessee shall keep the Property free and clear from any and all mechanics or laborers liens arising from
labor performed on or material furnished to the Property at Lessee's request. However, a lien on the Property
shall not constitute a

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default if Lessee, in good
faith, disputes the validity of the claim, in which event the existence of the lien shall constitute a default
thirty (30) days after the validity of the lien has been adjudicated adversely to Lessee.

2.5 Installation
of Equipment. Lessee may install, maintain, replace, and remove during the term of this Agreement any
and all mining machinery, equipment, tools, and facilities which it may desire to use in connection with its
mining activities on the Property. Upon termination of this Agreement for any reason, Lessee shall have a
period of six (6) months following such termination during which it may remove all or part of the above items
at its sole cost and expense.

2.6 Acquisition
of Permits. Lessee shall acquire all federal, state and county permits required for its operations.
Lessee shall be responsible for reclamation of only those areas disturbed by Lessees activities. All
bond amounts will revert to Lessee upon satisfactory completion of the reclamation program.

2.7 Commingling
of Ore. Lessee shall have the right to commingle ores from the Property with ores from other
properties provided that Lessee weighs and samples Owners ores in accordance with sound mining and
metallurgical practices and accounts for Owners share of production.

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2.8 Drill
Logs, Assays, and Maps. Copies of all drill logs, exploration information, assays, maps,
metallurgical studies, and other factual information pertaining to the Property shall be furnished by Lessee
to Owner on a monthly basis and upon the expiration or termination of this Agreement.

SECTION THREE
Inspection by Owner

3.1 Inspection
of Property. Owner, or Owners authorized agents or representatives, shall be permitted to enter
upon the Property at all reasonable times for the purpose of inspection, but shall enter upon the Property at
Owners own risk and so as not to hinder unreasonably the operations of Lessee. Owner shall indemnify and
hold Lessee harmless from any damage, claim, or demand by reason of injury to Owner or Owners agents or
representatives on the Property or the approaches thereto.

3.2 Inspection
of Accounts. Lessee agrees to keep accurate books of account reflecting the mining operations on the
Property, and Owner shall have the right, either personally or through a qualified accountant of Owners
choice and at Owners cost, to examine and inspect the books and records of Lessee pertaining to the
mining, milling and shipping operations of Lessee.

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SECTION FOURTaxes

4. Lessee
shall pay all taxes levied or assessed upon any improvements placed on the Property by Lessee. Upon
termination of this Agreement for any reason, taxes shall be apportioned between the parties on a calendar
year basis for the remaining portion of the calendar year. However, Owner shall not be liable for taxes on any
tools, equipment, machinery, facilities, or improvements placed upon the Property.

SECTION FIVE
Maintenance of Claims

5.1 Claim
Maintenance Fees. So long as the annual assessment requirement is suspended, Lessee shall pay all
federal claim maintenance fees and filing costs required to maintain the Property in good standing. Lessee
shall provide evidence of payment to Owner by June 30 of each year, except for 2006, in which case such notice
may be given by August 15, 2006. Lessee shall record an Affidavit and Notice of Intent to Hold in Eureka
County by September 1 of each year. If Lessee terminates this Agreement before June 30 of any year, Lessee
shall not be responsible for rental payments due in that calendar year.

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5.2 Assessment
Work. If the requirement of annual assessment work is restored by Congress, Lessee shall be
responsible for the performance and filing of assessment work unless this Agreement is terminated as
hereinafter provided. In the event of termination after June 30 of any calendar year, Lessee shall be
responsible for the performance and filing of assessment work for that year.

5.3 Relocation,
Amendment, and Patent. At any time during which this Agreement is in effect, Lessee may, with the
express written consent of Owner but at its own expense, relocate, amend or apply for patent on any of the
unpatented mining claims included in the Property, and such relocated, amended, and patented claims shall be
deemed to be covered by the provisions of this Agreement.

5.4 Mineral
Leasing. In the event of repeal or substantial change in the Mining Law of 1872, Lessee shall have
whatever rights may be afforded to Owner under the new laws, including (but not limited to) whatever preferred
right Owner may have to a lease from a governmental agency, subject to the payment to Owner of the production
royalties prescribed in Section One.

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SECTION SIXTermination
and Default

6.1 Termination.
Lessee shall have the right to terminate this Agreement at its sole discretion at any time by giving
sixty (60) days advance written notice of termination to Owner. Upon termination, Owner shall retain all
payments previously made as liquidated damages and this Agreement shall cease and terminate. Lessee will
provide Owner with all factual data, maps, assays, and reports pertaining to the Property. Lessee will also
deliver a Quitclaim Deed to Owner.

6.2 Default.
If Lessee fails to perform its obligations under this Agreement, and in particular fails to make any
payment due to Owner hereunder, Owner may declare Lessee in default by giving Lessee written notice of default
which specifies the obligation(s) which Lessee has failed to perform. If Lessee fails to remedy a default in
payment within fifteen days (15) of receiving the notice of default, and thirty (30) days for any other
default, Owner may terminate this Agreement and Lessee shall peaceably surrender possession of the Property to
Owner. Notice of termination shall be in writing and served in accordance with this Agreement.

6.3 Obligations
Following Termination. In the event of voluntary or involuntary termination, Lessee shall surrender possession
of the Property to Owner and

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shall have no further liability
or obligation under this Agreement except for its obligation (1) to pay its apportioned share of taxes, as
provided for in Section Four; (2) to pay any advance and production royalties then owed to Owner; (3) to pay
the cost of removal of all equipment as stated in Section 2.5; (4) to fulfill its reclamation responsibility
as stated in Section 2.6; (5)to satisfy any accrued obligations or liabilities; and (6) to satisfy any
other obligation imposed by this Agreement or by law.

SECTION SEVENNotices
and Payments

7.1 Notices.
All notices to Lessee or Owner shall be in writing and shall be sent certified or registered mail,
return receipt requested, to the addresses below. Notice of any change in address shall be given in the same
manner.

7.2 Payments.
Owner hereby directs Lessee to make all lease payments (whether paid in cash or in stock) of the
permitted purchase of a portion of Owners production royalty as set forth in Section 1.5 herein, to
David Knight. Any and all payments (whether paid in cash or in stock) respecting Owners one (1%) percent
production royalty which is not subject to purchase by Lessee, shall be paid as follows:

Name

Percentage of Payment

David C. Mathewson

50%

David C. Knight

50%

SECTION EIGHTAssignment

8. Lessee
may assign this Agreement at any time, in whole or in part, upon the prior consent of Owner, which consent
shall not be unreasonably withheld or delayed.

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SECTION NINEWarranty
of Title

9.1 Warrant.
Owner warrants and represents, to the best of Owners knowledge and belief at the execution of
this Agreement, that it is the owner of the unpatented mining claims described in Recital A and
all lode mineral rights within the boundary of these claims, subject to the paramount title of the United
States (but excepting those portions that may overlap adjacent fee lands); that the claims are valid under the
mining laws of the United States and the State of Nevada; and that Owner has and will continue to have the
right to commit the claims to this Agreement. Owner further warrants that all records have been filed with the
Bureau of Land Management pursuant to 43 C.F.R., Subpart 3833. Owner further warrants that it is not aware of
any claim disputes, legal actions, or environmental citations affecting the Property.

9.2 Examination
of Title Documents. Promptly after execution of this Agreement, Owner shall deliver to Lessee copies
of all certificates of location, affidavits of annual assessment work and any other documents bearing upon
Owners title, interest, or ownership in the Property. Lessee may then undertake such further
investigation of the title and status of the claims as Lessee shall deem necessary. If that investigation
should reveal defects in the title, Owner agrees to proceed forthwith to cure said title defects to the
satisfaction of Lessee; and in the event Owner should not do so, Lessee

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may cure such title defects and deduct the expense
incurred, including reasonable attorneys fees, from any payment to be made hereunder.

9.2 No
Liability for Loss of Claims. Lessee shall not be held liable for the loss of any claims by virtue of
invalid location by Owner. Lessee shall not be held liable for the loss of any claims due to any act of
governmental agencies, provided that Lessee has taken all reasonable and legal means to protect and maintain
such claims.

SECTION TENForce
Majeure

10.1 Suspension
of Obligations. If Lessee is prevented by Force Majeure from timely performance of any of its
obligations hereunder, except the payment of money, the failure of performance shall be excused and the period
for performance shall be extended for an additional period equal to the duration of Force Majeure. Upon the
occurrence and upon the termination of Force Majeure, Lessee shall promptly notify Owner in writing. Lessee
shall use reasonable diligence to remedy Force Majeure, but shall not be required to contest the validity of
any law or regulation or any action or inaction of civil or military authority.

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10.2 Definition
of Force Majeure. Force Majeure means any cause beyond a partys reasonable control,
including law or regulation; action or inaction of civil or military authority; inability to obtain any
license, permit, or other authorization that may be required to conduct operations on or in connection with
the Property; interference with mining operations by a lessee of oil, gas, or geothermal resources under the
Property; unusually severe weather; mining casualty; unavoidable mill shutdown; damage to or destruction of
mine plant or facility; fire; explosion; flood; insurrection; riot; labor disputes; inability after diligent
effort to obtain workmen or material; delay in transportation; and acts of God (but excepting any obligation
to pay money).

10.3 Economic
Force Majeure. During the extended term of this Agreement, Lessee shall have the right to suspend
operations and hold the Property during periods of Economic Force Majeure. Economic Force Majeure
shall mean periods during which the price of gold or other mineral commodities is too low to allow economic
recovery and sale of ore from the Property.

SECTION ELEVEN
Miscellaneous Provisions

11.1 Binding
Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their
respective heirs, executors, administrators, successors, and assigns.

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11.2 Applicable
Law. The terms and provisions of this Agreement shall be interpreted in accordance with the laws of
the State of Nevada.

11.3 Entire
Agreement. This Agreement terminates and replaces all prior agreements, either written, oral or
implied, between the parties hereto, and constitutes the entire agreement between the parties.

11.4 Recording
Memorandum of Agreement. The parties hereto agree to execute a Memorandum of this Agreement (short
form) for the purpose of recording same in the records of Eureka County, Nevada so as to give public notice,
pursuant to the laws of the State of Nevada, of the existence of this Agreement.

11.5 Void
or Invalid Provisions. If any term, provision, covenant or condition of this Agreement, or any
application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable,
all provisions, covenants and conditions of this Agreement, and all applications thereof not held invalid,
void or unenforceable, shall continue in full force and effect and shall in no way be affected, impaired, or
invalidated thereby.

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11.6 Time
of the Essence. Time is of the essence of this Agreement and each and every part thereof.

11.7 Confidentiality.
All reports and data provided by Lessee to Owner shall be held in strictest confidence, and Owner
shall not disclose such information without Lessees prior written consent.

11.8 No
Partnership. Nothing in this Agreement shall create a partnership between Owner and Lessee.

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above
written.